US existing home sales rise in September as higher mortgage rates cloud outlook

• The 30-year fixed mortgage rate reached 7.40%, the highest since November 2023, driven by the US-Israeli war with Iran which has boosted inflation and Treasury yields
• Housing inventory rose 1.9% to 1.60 million units, the highest level since November 2019, offering buyers more choice with 4.8 months of supply at current sales pace
• Median existing home price increased 1.3% year-over-year to $417,500, the highest for any September, while investor and second-home buyers accounted for 20% of transactions, up from 15% a year ago

US Existing Home Sales Rise Modestly in September Amid Rising Mortgage Rate Pressures

US existing home sales increased 1.5% in September to a seasonally adjusted annual rate of 3.99 million units, surpassing economist expectations of 3.95 million units, according to the National Association of Realtors (NAR). However, sales declined 2.2% year-over-year, with August and September representing the slowest months for home sales in 2026.

Mortgage Rate Concerns

The modest gain faces significant headwinds from escalating mortgage rates, which reached 7.40% for 30-year fixed mortgages last week—the highest since November 2023. Rates have surged 142 basis points since late February, driven by the US-Israeli conflict with Iran, which has fueled inflation and increased US Treasury yields. NAR Chief Economist Lawrence Yun warned that rising rates are reducing buyer qualification capacity.

Regional and Inventory Trends

Sales increased in the South and West regions but declined in the Northeast, while remaining flat in the Midwest. Housing inventory rose 1.9% to 1.60 million units, the highest level since November 2019, providing buyers more options. Supply increased 4.6% year-over-year, with months' supply at 4.8, up from 4.5 months a year ago.

Pricing and Buyer Composition

The median existing home price climbed 1.3% year-over-year to $417,500, marking the highest September price on record. First-time buyers represented 31% of sales, up slightly from 30% previously. Notably, individual investors and second-home buyers accounted for 20% of transactions, up from 15% in both August and the prior year.

Market Implications

The housing market remains subdued despite inventory improvements, with affordability challenges from elevated mortgage rates likely to constrain activity in coming months.